Penn National Gaming, Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a strategic planning tool that can be used by Penn National Gaming, Inc. managers to do a situational analysis of the organization . It is an important technique to evalauate the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Penn National Gaming, Inc. is facing in its current business environment.

The Penn National Gaming, Inc. is one of the leading companies in its industry. Penn National Gaming, Inc. maintains its dominant position in market by carefully analyzing and reviewing the SWOT analysis. SWOT analysis a highly interactive process and requires effective coordination among various departments within the company such as – marketing, finance, operations, management information systems and strategic planning.

The SWOT Analysis framework enables an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Penn National Gaming, Inc. to develop four types of strategies:

SO (strengths-opportunities) Strategies

WO (weaknesses-opportunities) Strategies

ST (strengths-threats) Strategies

WT (weaknesses-threats) Strategies

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect Penn National Gaming, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Penn National Gaming, Inc. SWOT Analysis

Strengths of Penn National Gaming, Inc. – Internal Strategic Factors

As one of the leading companies in its industry, Penn National Gaming, Inc. has numerous strengths that help it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Penn National Gaming, Inc. are –

Strong Brand Portfolio – Over the years Penn National Gaming, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Penn National Gaming, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.

Highly skilled workforce through successful training and learning programs. Penn National Gaming, Inc. is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.

Superb Performance in New Markets – Penn National Gaming, Inc. has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.

Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.

High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.

Strong Free Cash Flow – Penn National Gaming, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.

Successful track record of developing new products – product innovation.

Automation of activities brought consistency of quality to Penn National Gaming, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.

Weakness of Penn National Gaming, Inc. – Internal Strategic Factors

Weakness are the areas where Penn National Gaming, Inc. can improve upon. Strategy is about making choices and weakness are the areas where an organization can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

Article continues after advertisement

High attrition rate in work force – compare to other organizations in the industry Penn National Gaming, Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.

The profitability ratio and Net Contribution % of Penn National Gaming, Inc. are below the industry average.

Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Penn National Gaming, Inc. needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.

Not highly successful at integrating firms with different work culture. As mentioned earlier even though Penn National Gaming, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.

Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its competitors. One of the reason why the days inventory is high compare to its competitors is that Penn National Gaming, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.

Investment in Research and Development is below the fastest growing players in the industry. Even though Penn National Gaming, Inc. is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.

Limited success outside core business – Even though Penn National Gaming, Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.

Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Penn National Gaming, Inc..

New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for Penn National Gaming, Inc. to drive home its advantage in new technology and gain market share in the new product category.

Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines.

Government green drive also opens an opportunity for procurement of Penn National Gaming, Inc. products by the state as well as federal government contractors.

Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Penn National Gaming, Inc. in other product categories.

Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Penn National Gaming, Inc.’s products thus providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.

Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Penn National Gaming, Inc. to capture new customers and increase its market share.

The market development will lead to dilution of competitor’s advantage and enable Penn National Gaming, Inc. to increase its competitiveness compare to the other competitors.

Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.

The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.

Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.

No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.

New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.

Imitation of the counterfeit and low quality product is also a threat to Penn National Gaming, Inc.’s product especially in the emerging markets and low income markets.

Rising raw material can pose a threat to the Penn National Gaming, Inc. profitability.

The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.

Limitations of SWOT Analysis for Penn National Gaming, Inc.

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the
major limitations of SWOT analysis
. For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.

SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.

The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Penn National Gaming, Inc.

SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.

SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

Article continues after advertisement

Weighted SWOT Analysis of Penn National Gaming, Inc.

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Penn National Gaming, Inc. managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of Penn National Gaming, Inc.

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.